Pennsylvania | Real Estate Law
Legal Question
Buyer breaks agreement because 1st mort. won't completely cover purchase price.
My question: Do I have to refund the earnest money?
Here’s the background: We put our house on the market in early July, the first person to come through offered our asking price and signed a contract to close August 31st. They paid $5000 earnest money. The first week in August, I called to ensure the financing was secure. They said that the house appraised for $8000 less than the asking price and the bank would not originate a first mortgage for the entire purchase price but did offer a second to cover the difference. We also offered to float a second mortgage to cover the difference.
They declined both offers and backed out of the contract. This left us in a difficult spot because we only had 3 weeks until we had to move and suddenly no buyer. We scrambled and cancelled a lot of plans but were able to sell the house to another buyer for $5000 less than the asking price. Since the original buyer violated the contract, we decided not to refund their $5000.
The mortgage amount in the agreement was far below the amount the bank would write for the first mortgage.
Is this a breach of contract? Should I bring this to an attorney? If so in my state or the state where it occurred?
Thanks!!!
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